Biotech Layoffs: What’s Really Happening in the Industry and What’s its Market Outlook?
Biotech layoffs worldwide are causing some reason for panic amongst those in the industry. Yet, is this simply a return to normalcy regarding hiring cadence? And what does the outlook for the industry look like? Continue reading to learn more.
Written by: Chiara Brega
Biotech is going through an eruption of mass layoffs. On the face of it, this might seem a bad thing––those affected by it would certainly agree––but, under the surface, the story’s somewhat more intriguing.
According to Fierce Biotech (which tracks sector layoffs), this year, there have been 75 mass layoffs. Like small but angry volcanoes, numerous mid-sized firms are ejecting as much as 30-40% of their workforce. Novartis just let 8,000 people go. After a year of widespread resignations and easy job-hopping, the biotech talent market is finally adjusting.
Of course, the labor market trend on everyone’s lips over the last couple of years has been the drift away from the workplace that’s been termed the Great Resignation. Across nations and sectors, from retail to software development, the same patterns have been unfolding: consistently more open positions than skilled applicants ready to fill them. Life sciences certainly haven’t escaped this trend. In response, firms have been increasing compensation, offering improvements to work-life balance, and making other compromises to retain their hold on critical workers.
As we’ve noted previously, biotech investment peaked in January 2021. This meant the job market stayed extremely active as companies splurged the money they had raised. However, as night follows day, hiring is finally catching up with investment.
Nevertheless, overall hiring expectations in the UK remain positive, according to research from Lloyd’s Bank. In July, 45% of companies planned to expand their workforces over the next 12 months, with just 23% expecting to downsize. But put that in the broader context: both numbers are worse than they were a month earlier, reflecting the first signs of a slowdown since the end of the pandemic furloughs. Moreover, reduced hiring is driven by “macroeconomic conditions.” There were just 14 biotech IPOs in the first half of this year, compared to 104 last year. Until the broader economy is more stable, we should expect the job market to continue to cool.
The Great Sacking?
I still see reasons for optimism. Bloomberg reporter Sommer Saadi describes the expanding wave of layoffs as “the Great Sacking.” While the term is certainly apt, it captures only half the picture.
The layoffs we’ve seen so far are part of the broader downturn in biotech. But the sector is still growing and will remain an essential part of the UK and European economies—critical for public health. So what’s really happening is that the recent explosive excitement around biotech is finally dying down, and the industry is settling back into growing at a more normal pace.
As Fierce Biotech reports, despite all the mass layoffs this year, only “a few” have let anyone go from the C-Suite. Riskier projects are indeed being shut down, but the underlying firms are not going away. Instead, they are waiting out the global aftershocks of the pandemic and anticipating brighter times. Right now, layoffs are still balanced by new hires, and that’s likely to remain at least partly true.
So rather than a “Great Sacking,” I think the next year and a half will see the most dramatic changes in talent retention. The hallmark of the Great Resignation was difficulty retaining top talent—even global leaders like JP Morgan and Pfizer struggled to keep their top executives, directors, and technical leads. But increasingly, companies no longer have to bend over backward to retain talent in place: it’s that trend that’s going to be the most dramatic aspect of this new labor market.
Executive search is going to change as a result. The process will be more deliberate, requiring more thorough and deeper search options and more flexible search tools, such as those we’re highlighting in this month’s newsletter.
If you want to talk about how we can help, contact Chiara Brega.
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